Beales will return to profit within 18 months after completing a reverse takeover of 19 Westgate department stores from Anglia Regional Co-operative Society (ARCS), which will give the department store group more stores than John Lewis.
Beales chief executive Tony Brown said the deal, which will see ARCS pay Beales £7.5m to take the stores off its hands, would allow the business to drive its own label by amalgamating ranges, consolidating the supply chain and negotiating better margins based on increased volumes. The merged business will have 32 stores and share 118 suppliers. It will also launch a joint transactional website at an undisclosed date.
ARCS decided to offload its department store business to focus on its non-food operations. It is understood that ARCS has made wider losses than Beales, which narrowed its pre-tax losses by 32% to £670,000 in the year to October 30.
ARCS will keep a significant stake in the business with preference shares.
Beales, whose own labels comprise Broadbents & Boothroyds formal shirts, young fashion brand REDi and womenswear label Crimson, will drive the own-label offer in the new stores alongside its established brands mix including Joules, Hobbs and Jaeger. Brown said Beales would work with all the brands sold in the Westgate department stores “to get the best mix”. They include casualwear brand Esprit and young fashion brand Vero Moda as well as concessions from womenswear chains Alexon and Jacques Vert.
Beales will spend £1.2m in the first year refitting the 19 stores. The deal gives it a stronghold in market towns including Chipping Norton in Oxfordshire, Skipton, North Yorkshire and Peterborough.
Brown had previously said Beales’ optimum number of stores is 35.